There’s an incredible amount of choice when it comes to credit cards in Hong Kong and it’s about to get even bigger. This is because with the numerous property cooling measures introduced to curb Hong Kong’s housing market in 2012, banks are feeling the squeeze on the asset side of their business. Their mortgages margins are taking a hit in a time of low interest rates and when this happens banks normally start to focus on growing their unsecured business, namely cards and personal loans.
For consumers, this means that banks will be looking at their credit card offerings and improving and enhancing these after two years where a number of great deals were withdrawn or re-priced. This means that choosing the best credit card in Hong Kong will get more confusing.
So, where should you start?
1. Choose a card scheme
In other countries this wouldn’t really matter but for Hong Kong this is a little bit more relevant. Why? The answer is China. It’s growing exponentially as a tourist destination in general and for us here in Hong Kong in particular. Whether it’s hopping over the border for a quiet break or flying to Shenzhen for affordable cosmetic surgery (no, really…), we’re visiting the mainland more and spending more money there.
This only becomes a problem because Unionpay dominates China’s domestic card market and there have been reports previously of restrictive practices in processing credit card transactions in renminbi for other payment schemes. This shouldn’t affect transactions carried out in foreign currency but many shoppers carry a Unionpay badged card when visiting China. Just in case.
2. Rewards or interest rate
Getting cashback, discounts, points and prizes sounds great. But remember that no matter how generous you feel a bank offer is, they fund it through charging you a 15-20% annual interest on your outstanding card balance, plus the 1-2% they charge the merchants for using their terminals.
This means that your benefits only become benefits if you don’t pay any interest and can afford to pay your credit card balance in full every month.
If you’re planning on paying back the minimum amount every month, whilst keeping your spend levels high in order to accumulate points or miles, then your balance will quickly grow and could become unmanageable.
So your first decision should be based on whether you are planning to pay your credit card in full every month or revolve your card balance.
If you’re happy that you’ll be paying the full balance each month, just make sure you choose a card that has no annual fee or has high charges for foreign spending.
3. Which rewards offer the best value?
This is the trickiest part and will depend on what you are looking for. If you like collecting points with the possibility of redeeming them for gifts or discounts at a later date, the choices can be confusing.
Citibank’s Reward Card will award you 1 point for every HK$1 spent (although they offer 5x points at certain merchants in HK) and their points never expire, while Bank of East Asia’s card points expire after 24 months.
For mileage programmes where your spending accumulates airline miles, banks tend to charge an annual fee. HSBC’s mileage programme charges HKD$300 for example.
You also have co-branded cards that can give you discounts at specific merchants like the DBS Extravaganza card that gives you up to 20% off at all Extravanganza outlets.
To figure out which card is the best for your circumstances visit http://www.bestmoney.hk/en/credit-card